A Real Transition

An earnest attempt to encourage the inevitable transition of our economies would place small business at the center of the strategy.  Now personally, because of my libertarian leanings, I am not one to put much faith in government programs and massive intervention, but seeing as we are already spending upwards of 7 trillion dollars on the bankster bailout, I figured I would put in my two cents.

The first step to re-energizing local economies would be huge investment in our already well established small business development centers and business incubators.   These pillars of local communities have been helping small businesses get started and thrive for many years.  Beefing up their infrastructure and personnel would be an important first step in the process.  In addition, with added resources they could more easily call on local leaders in commerce to act as paid consultants to new and existing small businesses.  An investment in our local SBDC’s would provide a foundation on which viable new business plans could be developed and evaluated by qualified professionals.

With directed support towards business model development and improvement, the government could initiate the next phase of it’s plan: low-interest lending to small businesses with viable business plans.   True, the big-uns have gotten oodles of dough with no strings attached, but such behavior is hardly worth commenting on, as criminals are wont to do what they do best, especially when free money is involved.  Huge infusions of low-interest capital into our small businesses would be an unprecedented jump-start to our economy, as small businesses will purchase goods and services from businesses both large and small, all the while generating employment and local economic activity.  Strings attached to low-interest lending should include: an emphasis on distributed energy production, open source appropriate technology underwritten by micro-fabrication, and permaculturally-based food production.  NOW we’re talking capitalism a la Adam Smith.

President-elect Obama’s call to rebuild the nation’s infrastructure with government money can only mean one thing: massive opportunity for large government contractors at the expense of small business.  This is not just an issue of priorities, it is also an issue of process.

If big government spending is going to be favorable to a small business economy, then structural bias in the government procurement process must be addressed.  To illustrate the point, take a look at this solicitation notice from the Millennium Challenge Corporation.  After a quick glance, you will realize that the requirements are so broad, the geographic distribution so great, and the contract itself so huge, that there are perhaps two or three businesses in the world that could hope to compete on this contract.  Structural bias.  And, surprise, Chemonics International, one of the select few in the elite big business club, was given the award.  True, small business sub-contractors get thrown a bone here and there, but the range who can compete is still determined by Chemonics, as the medium sized prime candidates were squeezed out in the early stages, where true alliance building and small business consortiums are formed.

Contracting officers and project managers at the government level will retort that they are understaffed; they cannot possibly hope to manage 30 contracts for a single program.  It is much easier for them to bundle contracts and play lip service to small business while they do the best they can under oftentimes difficult and demanding circumstances.  Structural bias, and not by accident, but by design.

If you need more evidence for our government’s structural bias towards big at the expense of small, turn on C-SPAN.  Compare the hearings of the House Committee on Small business to any number of other committees, especially those related to defense-spending (where behemoth contractors dominate), like the Senate Committee on Foreign Relations, or the House Armed Services Committee.  Congresswoman Velazquez, I too can hear the crickets chirping.

Don’t expect an Obama administration to address these structural biases.  Distributed economies are antithetical to power politics; they empower local people and local communities at the expense of the powers that be.  Yet as the wheels come off of a system built on complex redundancy enabled by a dwindling supply of cheap energy, the transition itself is inevitable.  Just don’t expect it to come from above.


A Real Transition — 1 Comment

  1. Great commentary, worth at least a dime in the billion
    dollar bailout world. So, what can we do to participate or
    compete against Chemonics? Would local coalitions or
    alliances be a possibility?

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